Indonesia on same level as BRIC countries: minister

Asia News Network, The Jakarta Post, Hendarsyah Tarmisi, 25-01-2013

With its large domestic market, stable economic fundamentals and sustainable economic growth, Indonesia has reached the same economic standard of the so-called BRIC countries, according to Trade Minister Gita Wirjawan.

Trade Minister Gita Wirjawan

Speaking during a panel discussion at the annual gathering of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Gita said that Indonesia did not want a status that it did not deserve.

But with its latest economic performance, the country had reached the same economic standards as the BRIC countries of Brazil, Russia, India and China, Gita told the forum.

He said that Indonesia and the BRIC countries, which contributed more than 20 per cent to the world economy, played an important role in coping with the global economic slowdown. These countries should, therefore, be able to maintain their economic growth so that the world would no longer rely on industrialised nations such as the US or European countries.

Gita also acknowledged that corruption would remain a problem in bringing Indonesia to a higher economic level. But he said awareness among the government and people on the need to eliminate corruption was quite high.

Low salaries remained a major problem in fighting corruption in the state bureaucracy, he said. “It is, therefore, important to provide fiscal space to support a more conducive democracy for well-distributed and sustainable welfare,” he said. “I am quite sure, in the next few years, Indonesia will see less corruption,”

he said.

The trade minister also acknowledged that the development of infrastructure could be taken forward quickly in the more democratic Indonesia, as the people had more say in determining, for example, the location of projects.

However, he said that political reform would create a positive economic impact in the long term.

The WEF founder and executive chairman, Klaus Schwab, opened the World Economic Forum Annual Meeting 2013, which is taking place from Jan. 23 to 27, under the theme “Resilient Dynamism”.

More than 2,500 participants from over 100 countries, including nearly 50 heads of state or government, 1,500 business leaders, and representatives from civil society, media, academia and the arts, are taking part in the forum.

Gita said with its strong domestic consumption, Indonesia — with a population of 237 million — had become one of the fastest-growing economies in the world.

The Indonesian government has been able to maintain low inflation and sustainable economic growth of above 6 per cent in the past several years. With its strong economic credentials, the largest economy in Southeast Asia has successfully evaded the global economic slowdown that has hit the globe since 2008.

McKinsey & Co. predicts that Indonesia will be the seventh-largest economy in the world and will add 90 million people to its middle class by 2030. There are 45 million middle-class Indonesians today, and the country ranks as the 16th largest economy in the world.

Gita said that domestic consumption and investment remained the main drivers of the Indonesian economy as exports showed no significant growth during the last two years. But he added that with the signs of recovery in major trading partners such as China, the contribution of Indonesia’s exports to Gross Domestic Product would be higher.

In addition to Gita, the chairman of the Indonesian Investment Coordinating Board, Chatib Basri, and Tourism and Creative Economy Minister Mari Elka Pangestu, one of candidates to succeed Pascal Lamy — the director general of the World Trade Organisation — also took part in the WEF annual meeting.